Cash Flow from Operating Activities vs Net Income

[@cooldog545]

Your content is so amazing. Straight to the point with clear examples. I love the way you speak as well. It's so funny to me because it reminds me a lot of Bill Nye. I'm constantly waiting for you to say "But wait.. There's more!" Keep up the great work!

[@Edspira]

Thank you so much for the encouragement! I'm humbled to be mentioned in the same context as Bill Nye 😀 I'm glad you're enjoying the videos, I'll keep them coming!

[@MyFinancialFocus]

The cash flow statement is my favorite. Probably one of the most important aspects of the operations of a business is their short term cash flow. Lack of liquidity will lead to emergency loans and high interest rates. Great video!

[@Edspira]

Couldn't agree with you more! Excellent insight!

[@drewgoebel64]

Man, I got my answer in the first two minutes of the video but couldn't quit watching. Awesome video, I loved the pace of information.

[@carolinebuhlman3898]

these videos are genius. your humor perfectly cpatures my attention and makes the material easy to understand. please do more accounting basics in this style!!

[@Edspira]

Thank you my friend! More videos are on the way!

[@minthantaung7562]

This is very informative and well-explained in a thorough manner, I'm currently writing an assignment on Finance subject and I think your videos are so helpful.

[@Edspira]

Glad it was helpful!

[@minakshimukherjee9183]

Great teacher. Thankyou alot sir . Lots of love from India 🇮🇳🇮🇳🇮🇳🇮🇳🇮🇳🇮🇳🇮🇳🇮🇳. I'm also a CA (CHARTERED ACCOUNTANT) FINAL Student.

[@Edspira]

Thank you for your support! Congratulations on becoming a CA!

[@rob8482]

I love, Wilson, on your bookshelf! Great video as always!

[@Edspira]

I'm glad you enjoyed the video, plus the cameo from Wilson!

[@hotsmissed9965]

does member ship includes accounting course? or videos in order to help me get better in accounting?

[@koklol2837]

This is way to clear and concise, so the only question I have is; Why is learning accounting and finance in university made so difficult then? Its almost like they want to make it sound complex and make it intimidating to study.

[@Edspira]

Some profs focus on research rather than teaching, while other profs are just doing a job and don't find the material engaging. That's why it's so refreshing when you sit in a class on day 1 and find that the prof is really excited to be teaching and eager to help you learn. There are some great profs out there, but unfortunately too few!

[@dormammu1256]

your communication skills are very good

[@Edspira]

Thank you!

[@ethanstephens7320]

Hey Michael! I love your videos, they are helping me survive intermediate accounting. Do you think you could make a video about calculating the Weighted Average Shares Outstanding in order to calculate basic and diluted EPS?

[@Edspira]

I will add that topic to the to-do list! Good luck with the class, hang in there!

[@gorandamchevski]

I just worked on an Asian company, the income (EBIT and Net) were all over the place, but the cash flows were consistent. I used Operating CF - Depreciation & A, in order to get a better estimate of the true EBIT - How much did I mess up? :D -- My assumption was that OCF is an approximation to EBITDA, so I subtracted DA in order to "get" EBIT. I need this to get a reliable interest coverage ratio, and I felt that the book value of EBIT was downplayed by the company. -- Would appreciate any comments! Thank you for your content!

[@The6Foot4Asian]

I mean, if you think about it, OCF = NI + D&A + Increases in Working Capital (excluding cash). There could be a few more line items, but those two are the heavy hitters. So OCF - D&A is this weird “income without Interest and Taxes” so maybe call it EBDA? Hahaha

[@Edspira]

A lot of people view EBITDA as a good proxy for operating cash flow, so what you did is quite common. A key difference between EBITDA and OCF is that EBITDA includes the effects of changes in working capital whereas OCF does not. For example, if a company makes a lot of credit sales and accounts receivable increases, this will increase EBITDA but have no effect on OCF. A second difference is that EBITDA isn't affected by the choice of capital structure, whereas OCF is. For example, if a company decides to increase its borrowing and rely more heavily on debt financing, the increased interest expense will have no effect on EBITDA but will reduce OCF.

[@alihasnain3280]

I really want to appreciate your content....Sir you make learning accounting so much fun.

[@Edspira]

Thank you for the kind words! I'm so happy you're enjoying the videos 😀

[@lenawinton8812]

Wilson on the bookshelf 😂 Thanks for this video, it was really helpful! Subscribed!

[@IIMAnishInsights]

Great, straight to the point

[@Edspira]

😀

[@tarekalsherif57]

Awesome! Thank you Michael

[@Edspira]

No problem my friend! I hope life is treating you phenomenally well!

[@tobyxp]

Thank you very much for the content sir. Just a question please, in case there's positive Net Income and negative Operative Cash Flow, would it be still possible to give EPS to shareholders? Or how is that managed?

[@Edspira]

If you're asking whether a company can issue a dividend when it has net income but negative operating cash flow, the answer is yes. To do this, they would need to obtain the cash from a source other than their operations (e.g., they could borrow money and then pay it out as a dividend)

[@tobyxp]

@@Edspira Thank you sir!

[@jothenater]

Your content is amazing!

[@Edspira]

Thank you so much, that means a lot!

[@shahjadamonsur1110]

Sir, Nice video. How often should a company prepare cashflow statement

[@Edspira]

Publicly-traded companies in the U.S. need to issue a statement of cash flows every quarter

[@shahjadamonsur1110]

@@Edspira Thanks

[@sirloinsteakkk5972]

This is the reason why i choose ROCE base on operating cash flow than ROCE in normal way

[@Edspira]

😀

[@blixerblacking4211]

but if the company receives revenue at the same time of cash then the net income will be equal to cash !! isn't true

[@yesitsme6]

solved all my problems at once

[@akotoemmanuel3651]

Thank you

[@Edspira]

No problem my friend!

[@AliKhan-yj9yr]

🔥

[@Edspira]

😀

[@danajackson2902]

As much as I love seeing you, your videos when you're not on camera go at the slower pace with more emphasis on the material and numbers. When you are on camera it's like a performance variable kicks in, you speed up and spend less time explaining some of the material and it's harder to follow. Don't get me wrong - all of your material is bringing me sanity and compared to McGraw Hill, you are a Godsend! But -- less performance, more quality delivery.